DFSA demonstrates profound intolerance of failures to provide information

Chris Hamblin

25 July 2018

The DFSA has imposed a fine of US$205,200 (753,084 dirham) on Al Ramz, which is a recognised member of NASDAQ Dubai. It has also obliged the firm to pay $100,000 (367,000 dirham) towards the cost of its investigation. It fined Al Attar $32,640.

The DFSA describes the firm's failure to hand the information over as 'serious.' Its investigation initially focused on trading on NASDAQ Dubai by Al Ramz and others, which the DFSA suspected may have been in breach of Part 6 DIFC Markets Law 2012. The DFSA later expanded the scope of its investigation to include further suspected contraventions, including the obstruction of its investigation and the submission of false, misleading and deceptive information. In a twist of irony, the trading in question was eventually found not to have been illegal.

Al Ramz’s misconduct included:

misleading the DFSA about the users of computers used by two Al Ramz brokers at the time of the trading in question;
selectively withholding certain material communications (including emails and recordings of telephone calls) relevant to certain trading;
failing to disclose that one of his superiors was 'centrally involved' in such trading; and
failing to disclose close family relationships between the Al Ramz client connected to the trading and certain senior members of Al Ramz’s staff, including its senior managers.

In relation to Mr Al Attar, the DFSA found that he:

engaged in conduct intended to obstruct the DFSA in the exercise of its powers, without having a reasonable excuse for doing so; and
provided information that was false or misleading, while also concealing information i a way that was likely to mislead the DFSA.

Al Attar reconfigured the computers of two Al Ramz brokers and handed them over to the DFSA while claiming falsely that they were the computers used by the brokers at the time of the trading in question. He also tampered with the email account of one of the brokers, deleted relevant electronic data collected during a DFSA inspection visit, refused to provide the DFSA with certain relevant electronic data stored on Al Ramz’s IT system (while also instructing one of his minions to do the same); and misled the regulator about Al Ramz’s IT system.

The conduct caused the DFSA to incur considerable and otherwise unnecessary investigative costs, but it bases its anger with Al Ramz on much broader principles than that. It insists on people being open with it whenever it demands information, as this is its main source of control.

Both Al Ramz and Mr Al Attar went for an early settlement of the charges against them. Had they not done so, the fines would have been $228,000 (836,760 dirham) for the firm and $40,800 (149,736 dirham) for the IT manager.